Friday, September 2, 2011

Italian Bonds back to pre ECB-buying levels?

Got an email from a friend from Morgan Stanley this morning.
He shot a 1-liner: 'Check out 30-day charts on Italian long-end bonds'.

And the very long-end is already back to pre-SMP levels.
The 10y one has erased around 60% of the tightening boosted by the ECB.

What's next, my fellow friends?

Stay long those German CDS contracts..
Here are the charts:

BTPS Sep 2040:

 BTPS Sep 2021:

*Disclaimer: charts and data are presented as I receive/see them. Sources are usually not checked for validation and my own calculations are of 'back of the envelope'-type. I am aware that some math that I do myself might be wrong and/or misleading to some extent. In financial markets the rate of change of economic data is often more important than the actual level and the perception of 'what is priced in' is more important than 'what is actually going to happen'. This is actually the way people pick entry and exit points. So... yes, sometimes you might say 'This guy is an idiot, this is way wrong!' with a high conviction, being right. Not to worry. Markets are made of expectations and the clash of conviction between its participants. Portfolio managers know that being an idiot is sometimes profitable and being smart is often a bad choice. It is all reality, sometimes good, sometimes bad. By the way: corrections to my analysis and intelligent debate is welcome. theintriguedtrader AT gmail do com

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